SEOUL - Kia Corp has cut the price differential between its vehicles and competing Chinese models in Europe this year, the automaker’s chief executive said, underscoring a mounting price battle as Chinese carmakers accelerate their expansion into a key overseas market while facing slower sales at home.
Speaking at the company’s Investor Day event earlier this month, CEO Song Ho-sung said Kia has reduced the typical price gap with Chinese models in Europe to about 15-20% from the previous 20-25%, with the precise figure varying by market. Song’s comments were made public via a recording of the event.
The strategy of narrowing price differentials has helped Kia, which together with Hyundai Motor ranks third in global vehicle sales, raise its global revenue and withstand a broader drop in the market, Song said.
Chinese manufacturers have been rapidly increasing their presence in Europe, making the region a principal contest between long-established automakers and new entrants from China, particularly in electric vehicles. Among those firms, BYD saw car registrations in Europe surge by nearly 150% in March, a jump that far outpaced the 11% increase in overall European car sales and the 6% growth recorded by Kia and Hyundai.
That fast-paced growth by Chinese brands has pressured incumbent automakers to respond with price reductions and more affordable vehicles. Song said Kia has been able to draw on its solid profit position as a competitive advantage in facing the low-priced incursions from China.
At the same time, Kia disclosed a quarterly profit decline on Friday, with the company attributing part of the downturn to sales incentives in Europe implemented in response to rising competition from Chinese automakers.
"Chinese companies launched an aggressive push with low-priced EV models, and in some European countries their market share has been rising much faster than we had anticipated," Kia said during an earnings conference call.
Song also outlined his expectation that a restructuring of China’s auto industry could arrive sooner than previously thought as Beijing shifts strategic emphasis away from autos toward other sectors like artificial intelligence and robotics. Earlier signals from Beijing indicated a willingness to end EV subsidies that had supported the rapid expansion of China’s EV makers, a dynamic that contributed to oversupply in the domestic market and has been a driver for overseas expansion.
"Since they would no longer be able to receive support from the Chinese government, Chinese automakers lack the firepower needed to push forward further," Song told investors. "It appears the time for restructuring may be approaching. Until then, we should continue pursuing a growth strategy, leveraging our ... war chest."
Hyundai Motor’s CEO Jose Munoz offered a similar assessment about competition from Chinese firms, emphasizing Hyundai’s ability to expand while maintaining profitability. "We are not able to grow at the same pace as they’ve been growing all together, but we’ve been able to grow to be very profitable," he said. "We do it all by ourselves. So we only get our own support."
The broader backdrop includes a sharp slowdown in Chinese domestic car demand: China’s car sales dropped by 18% in the first quarter compared with the same period a year earlier, and they are projected to remain flat or decline in the foreseeable future.
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Implications
The narrowing of price gaps in Europe signals intensifying competition that has immediate implications for automakers’ pricing strategies, profit margins and market share battles across the European electric vehicle and broader automotive markets. Kia’s reliance on incentives to defend market position demonstrates the trade-off between short-term sales growth and margin preservation.